GBP/USD: Navigating Swings and Shifting Fortunes Amidst Labor Market Focus
GBP/USD embarked on a journey of bullish momentum, reaching heights of 1.2730 during the European session on Thursday. However, the narrative took an intriguing turn in the latter half of the day, with the pair closing virtually unchanged below the psychological threshold of 1.2700. As of the time of this analysis, the current trading level stands at 1.2667. This analysis explores the potential for a swing approach in the wake of recent market dynamics.
Technical Perspective:
The recent rebound from the 61.8% Fibonacci area positions the price for a potential swing approach, signaling the formation of a new bullish impulse. This occurs against the backdrop of a bearish opening session on Friday, adding an element of unpredictability to the ongoing price action.
Upcoming Jobs Report:
The focus now shifts to the eagerly anticipated release of the December jobs report by the US Bureau of Labor Statistics. Projections suggest that Nonfarm Payrolls (NFP) are poised to rise by 168,000, while the Unemployment Rate is expected to inch up to 3.8% from November's 3.7%. The outcome of this report holds significant implications for GBP/USD.
Potential Scenarios:
In the event of an NFP increase surpassing 200,000, investors may recalibrate March rate-cut expectations, bolstering the US Dollar (USD) and exerting downward pressure on GBP/USD. Conversely, an NFP reading closer to 100,000 could reinforce the notion of a Federal Reserve (Fed) policy pivot, triggering a decline in US yields. In this scenario, GBP/USD could gain traction, aligning itself with the upward trajectory observed in US stocks.
Our preference
Long positions above 1.2500 with targets at 1.2750 & 1.2850 in extension
Trade closed: target reached
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Trade active
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Building on the insights from our recent analysis, the GBP/USD currency pair exhibited a noteworthy performance following the Friday Nonfarm Payrolls (NFP) report. The price action aligns with our projections, reaching the initial take profit target and subsequently retracing to retest the crucial Fibonacci area between 50% and 61.8%. As Monday's market commenced, a fresh wave of bullish momentum unfolded, strengthening our conviction in reaching the second take profit.
I charted this buy move on Monday, I am so glad I have learned not to follow the masses because so many traders have shorted this pair all week but I saw the "W" pattern. Thank you for confirming what I saw on Monday and now... we are in the bag! Cheers to us collecting pips and coins.